UCC Document Community

I'm still confused about the 'deals in goods of that kind' requirement. What if the consignee normally sells different types of goods but agrees to take your consignment as a special arrangement?

One thing that hasn't been mentioned yet is the 20-day rule for consignments. Even if you file your UCC-1, you need to notify any existing secured parties who have filed against the consignee's inventory. You have to send written notice at least 20 days before delivering the consigned goods, or your filing won't protect you against those prior secured parties. I've seen consignors get burned by missing this step - they filed their UCC-1 but didn't give proper notice to the bank that had a blanket lien on inventory. When the consignee defaulted, the bank claimed priority over the consigned goods. The notice requirement is in UCC 9-324(b) if anyone wants to check the exact language.

The scope of article 9 ucc really comes down to whether you're creating a security interest in personal property to secure an obligation. If your 'lease' is really just a way to finance the debtor's acquisition of equipment, it falls under Article 9 regardless of what you call it. Focus on the economic substance, not the legal labels.

This is a great discussion that highlights how nuanced Article 9 scope determinations can be. One practical tip I'd add - consider creating a decision tree or flowchart for your team that walks through the key factors: lease term vs. useful life, purchase options, residual value expectations, etc. We implemented something similar and it's helped standardize our approach across different deal types. Also, document your reasoning for each decision - auditors and examiners love to see that you have a consistent methodology for scope determinations, even if they might disagree with specific conclusions.

I've been in similar tight spots with financing deadlines. One thing that might help immediately - try contacting other equipment financing companies or alternative lenders who might have different UCC search requirements. Some smaller lenders are more flexible about accepting preliminary searches or might even waive the requirement if you can provide other forms of collateral verification. Also, if you have an existing relationship with an attorney or accountant, they might have access to commercial databases through their professional subscriptions and could run a quick search for you at cost. Time is critical here so definitely pursue multiple options simultaneously rather than waiting for each one to pan out.

I'm dealing with a similar situation right now and wanted to share what I've discovered. First, definitely try calling your lender tomorrow morning like others suggested - many banks will run the searches themselves if you explain the tight timeline. Second, I found that some county clerk offices maintain UCC filing databases that might be searchable online for free, though Delaware might be different. Third, if you have any existing business relationships with law firms or CPAs, reach out immediately - they often have LexisNexis or Westlaw subscriptions that include UCC databases. Finally, consider asking the equipment seller if they can provide any lien waivers or documentation about the collateral's current status - sometimes they have insights about existing financing that could help. Time is your enemy here so definitely pursue all these options simultaneously. Good luck with your deal!

Quick follow-up question - does anyone know if experimental aircraft follow the same UCC rules? I have a client with a kit-built plane that doesn't have standard registration.

Great discussion here! I've handled several aircraft UCC filings and want to emphasize the importance of getting both the collateral description AND the debtor name exactly right. For a $285K Cessna deal, I'd recommend: 1) Use the exact N-number from the FAA registry, 2) Include make, model, year, and aircraft serial number, 3) Triple-check the LLC name matches state records exactly (including punctuation), 4) Don't forget the parallel FAA security interest filing in Oklahoma City, and 5) Set up your continuation reminder system immediately. The dual filing requirement trips up a lot of people - you need both UCC perfection AND FAA registration to be fully protected. Also consider doing a comprehensive UCC search first to identify any existing liens that need to be satisfied or subordinated.

Based on everything discussed here, it sounds like your lease-purchase arrangement probably does meet the UCC definition of chattel paper. Document shows monetary obligation (lease payments), document grants/reserves security interest in specific goods (the equipment), and both elements are in the same agreement. I'd go with the 'all chattel paper and all goods described therein' collateral description approach that others mentioned.

I've been following this discussion and wanted to share my experience with a similar situation. I had a client with heavy machinery leases that included purchase options, and we went through the same analysis of whether it qualified as chattel paper under the UCC definition. What really helped was creating a checklist: (1) Does the document evidence a monetary obligation? (2) Does it evidence a security interest in specific goods? (3) Are both elements present in the same record or set of related records? In our case, the lease agreement clearly showed monthly payments AND explicitly stated that the lessor retained a security interest in the equipment until the purchase option was exercised. That checked all the boxes for chattel paper. We used the "all chattel paper and all goods described therein" collateral description and had no issues with perfection. The key insight for me was that retention of title alone isn't enough - there needs to be an actual security interest component documented for it to qualify as chattel paper under the UCC definition.